PUCO seeking outside audit of FirstEnergy

The Public Utilities Commission of Ohio has set Nov. 25 as the deadline for accepting proposals from auditing firms to examine filings by FirstEnergy Corp., including information compiled prior to the passage of House Bill 6 in the state legislature.
The PUCO has jurisdiction over FirstEnergy’s three electric distribution companies, Cleveland Electric Illuminating Co., Ohio Edison and Toledo Edison and is seeking a third-party review of the utility and information it filed with the Securities and Exchange Commission regarding its compliance with corporate separation laws and regulations. HB 6 provides funding for nuclear plants operated by FirstEnergy.
The PUCO plans to select an auditor by Dec. 2 and a report of the audit will be due April 21, 2021.
In its order for the audit, the PUCO notes that information recently filed by FirstEnergy with the SEC about an internal investigation by the company “warranted further examination.”
In March of this year, FirstEnergy Solutions emerged from bankruptcy as Energy Harbor Corp. and was no longer an affiliate of the distribution companies’ parent, FirstEnergy Corp. And in April, the PUCO approved an application filed by Suvon, LLC, an affiliate of the companies, for certification as a Competitive Retail Electric Service and aggregator in Ohio. The approval by the PUCO raised questions by the Ohio Consumers’ Counsel and others over Suvon’s use of a trade name and corporate separation regulations.

Separate case
A separate proceeding before the PUCO is focusing on political and charitable spending in support of HB 6 by FirstEnergy and its distribution companies.
The OCC is claiming FirstEnergy has refused to respond to questions about its support of HB 6.
“This is a case that should be about whether FirstEnergy used funds collected from... utility customers for alleged illegal activities to support HB 6, the $1.5 billion bailout bill for its two, uneconomic nuclear units,” a motion filed Nov. 6 by the OCC says. “In fact, when the PUCO opened this proceeding, it described its purpose that way: ‘to review the political and charitable spending by FirstEnergy in support of HB 6.’But when OCC sought to learn the truth about whether FirstEnergy spent or used funds collected from Ohio utility customers for HB 6 (instead of providing for utility service) the FirstEnergy utilities refused to answer a single question.
“The backdrop for this regulatory dispute includes the extraordinary events alleged in the U.S. Government’s criminal complaint. Far from extraordinary, the discovery that OCC seeks from FirstEnergy utilities…is the type of discovery ordinarily permitted and encouraged under PUCO rule and Ohio law. The OCC files this motion to compel to get answers about what FirstEnergy did for HB 6 and who paid for it.”
In a response filed last week, the three FirstEnergy companies contend the OCC and PUCO don’t have prosecutorial authority over the issue.
“Both the Commission and OCC are creatures of statute, and neither is authorized to prosecute alleged illegal activity. OCC also fails to identify statutory authority for the Commission to investigate illegal activity that is unrelated to a public utility’s provision of utility service to customers,” the response says.
Jeffrey Longstreth, 44, and Juan Cespesdes, 41, of Columbus, have each pleaded guilty to participating in a racketeering conspiracy involving more than $60 million paid to a 501(c)(4) entity to pass HB 6.
Longstreth and Cespesdes are two of five persons, including Larry Householder, the former speaker of the Ohio House of Representatives, charged in a criminal complaint and indicted by a federal grand jury in July.
Charging documents allege Householder, 61, Glenford, Oh., Matthew Borges, 48, of Bexley, Oh., Neil Clark, 67, Columbus, Longstreth and Cespesdes conspired to violate racketeering statutes through wire fraud, receipt of millions of dollars in bribes and money laundering. Generation Now, the 501(c)(4) entity, was also charged.
According to court documents, from March 2017 to March 2020, millions of dollars were funneled to Householder and others in exchange for their help in passing HB 6.
The defendants then also allegedly worked to ensure the bill went into effect by helping to defeat a ballot initiative that would have given voters a chance to overturn the legislation.